The Cabinet Committee on Economic Affairs (CCEA) has announced Minimum Support Prices (MSPs) for certain rabi crops of 2014-15. Industrial output improved in September 2014 from the previous two months, while services output came to a standstill in October 2014. Both wholesale and retail inflation eased in October 2014, heightening expectations of a rate cut by the central bank. Fiscal health continues to be worrisome as revenue collections lag, six months into the fiscal. These uncertainties over growth revival continue to prevail.

The 'First Advance Estimates of Production of major Kharif crops for 2014-15', have put the kharif output to be 7% lower from the Fourth Advance Estimates of 2013-14. Industrial growth too has not been very encouraging yet again, as revealed by new IIP data in August. Though on an expansion mode, services sector activity only paced in September 2014 over August. Annual inflation continued to be on the lower side, thereby prompting the Reserve Bank of India to retain the key policy rates, even as liquidity provided under the export credit refinance (ECR) facility has been reduced. Though the outlook for retail inflation has improved, monetary easing may not be possible in the current fiscal due to upside risks from food price shocks and geo-political tensions in the Middle-East. Government expenditure fell yet again, keeping the deficit lower y-o-y. However, trade deficit has widened to a 16-month high. Owing to all these macroeconomic developments, financial market activities remained mixed.

GDP growth at 5.7% during Q1FY15 has been buoyant on the back of industrial activity, while the performance of agriculture and services remained sluggish. Meanwhile, as per recent data for various macro indicators, wholesale inflation has ebbed considerably. Fiscal deficit too has posted a contraction, as against the steep increase a year ago. On the external front, imports of gold have soared, even as oil imports have dipped. During Q1FY15, contraction of trade deficit led to the narrowing of the current account deficit (CAD). Tight liquidity conditions continued in August, though there was an improvement over the previous month. Easing crude oil prices and the possibility of an interest rate hike by the Fed, put downward pressure on the rupee. Yields in both the primary and secondary markets of the G-sec market hardened, following policy measures by the government and the central bank respectively. The secondary equity market was upbeat, following a revision in India's outlook.

The current scenario of the Indian economy has been characterised by a pick-up in the industrial activity and easing trend in inflation. Moreover, the services sector output stood at 52.2 points as per the HSBC Services Business Activity Index. On the external front, exports have witnessed a year-on-year positive growth of 7% in July 2014. On the back of recent pickup in the industrial activity, ongoing fiscal consolidation, external demand picking up, firming up of exports growth and stabilisation of crude prices, the Reserve Bank of India has anticipated the real GDP growth to be in the range of 5 to 6 % for FY 2014-15.

As per the Central Statistics Office's (CSO) Provisional Estimates of National Income 2013-14, the economy grew at a sub-par rate of 4.7%. Lacklustre performance of industrial activity and deceleration in the services sector led to this slowdown, while agricultural performance was upbeat. At 0.4%, industrial growth was pulled down by manufacturing and mining sectors. At 6.8% of GDP, services sector grew at a slower pace than witnessed a year ago, due to deceleration in the growth rate of the combined category of trade, hotels and restaurant and transport, storage and communications to 3% from 5% in 2012-13.

As per the Central Statistics Office's (CSO), National Account Statistics 2014, the Private Final Consumption Expenditure (PFCE) by object at 2004-05 prices has been estimated to post a growth of 5.1% in fiscal year 2012-13 against 9.2% in 2011-12. The PFCE (in domestic market) for the year 2012-13 has been the lowest since 2004-05 when it was 5.0%.

The Central Statistics Office (CSO) has estimated India's real GDP growth at 4.7% (as per the provisional estimates of GDP at Factor Cost) for the fiscal 2013-14 due to laggard performances of the industrial and services sectors. The industrial sector is estimated to grow at 0.4%, due to decline in output of mining & quarrying (-1.4%) and manufacturing (-0.7%), while the services sector is likely to post a slower growth of 6.8%. On the other hand, agriculture is estimated to grow at a notable 4.7% from a 1.4% rise of last year. In the agriculture sector, the Third Advance Estimates of crop production point to yet another record production for the year 2013-14. This is expected to be led by increased output of rice and wheat.

As per CSO's First Revised estimates of National Income, Consumption Expenditure, Saving and Capital Formation figures, the gross domestic saving and gross capital formation has been expected to be at 30.1% and 34.8% of GDP at market prices respectively.

As per CSO, GDP is expected to grow at 4.7% in Q3 of FY 2013-14, lower from the Q2: 2013-14, but higher from the comparable quarter a year ago. This marginal slip-up is likely to come from the slowdown in agriculture and allied activities, fall in industrial output, even as the 'financing, insurance, real estate and business services' sector is expected to put up a notable rise of 12.5% in Q3 2013-14.